OPINION: The bonus that Big Business gets from Missouri – but you don’t

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By NICOLE GALLOWAY
Missouri State Auditor, CPA

Missourians deserve a level playing field when it comes to the taxes they pay. They’re rightly upset by the thought that the system is being rigged in someone else’s favor.

Individual taxpayers know that if you’re late paying your taxes, you’ll pay penalties and interest. There’s no bonus for meeting the deadline. In fact, more and more Missourians who file their taxes on time – and even well before April 15 – have discovered that their “reward” has been a longer and longer wait in getting a refund from the Department of Revenue.

Which brings us what I’d like to call “Missouri’s Big Business Bonus.” You might to want to sit down when you read this.

BIG BUSINESSES POCKETED $124 MILLION
Businesses in Missouri – including the state’s largest retailers – pocketed about $124 million in fiscal year 2018 and $120 million in fiscal year 2017… just for turning in the sales taxes they owe on time. Not early, mind you, but by the legal deadline. Those are sales and use taxes that you as a customer paid, but the business got to keep, merely because they paid their taxes on time.

I just completed an audit on the collection of sales and use tax by the Department of Revenue, our third since 2015. Missouri is one of 28 states that offer this break to retailers, but our state’s discount for timely payments is the second-most generous in the nation.

The audit found that it’s the largest retailers that primarily benefit from the Big Business Bonus. In fiscal year 2016, the 50 largest sales tax collecting businesses retained approximately 72 percent of the discounts over $2,500, with the single largest sales tax collecting business receiving $10 million in discounts.

NO ECONOMIC BENEFIT
You would think Missouri’s lax approach to this giveaway would provide an advantage in keeping and attracting businesses. The numbers – a stagnant population that’s been linked to low job growth – show otherwise. As a state, we aren’t seeing the economic benefits of this corporate giveaway policy.

(Missouri’s population has grown by only two percent since 2000, according to the Missouri Economic Research and Information Center, reflecting declines in job creation in manufacturing, construction, medical fields and social services.)

NO ACCOUNTABILITY
In many cases, there’s no accountability when it comes to the cost of these economic policies. My audit also found that the Department of Revenue does not report the cost of this discount to the General Assembly, local governments and, most importantly, the public.

Not only does this makes it difficult to understand the fiscal impact, it leaves the legislators who make budget policy unable to make informed decisions about the effectiveness and cost of offering this break to big businesses.

OUR STATE LEADERS MUST DO BETTER
Our state leaders must do a better job determining which economic incentive policies are working and which aren’t, which is why I am calling on legislators to eliminate the Big Business Bonus.

Missourians understand that $244 million – the amount pocketed by businesses over two years – could help meet the needs our state has in fixing crumbling roads and bridges, protecting our schools, offering better mental health services, and keeping our rural hospitals open.
Promoting a good business climate doesn’t have to be at odds with protecting taxpayers, and economic incentives can and do work. But we have to be smart about incentives like the Big Business Bonus – being able to measure how well they work, and changing or eliminating them when they don’t. It’s just common sense.

(Missouri State Auditor Nicole Galloway is a candidate for governor in 2020. Galloway, a Democrat, won a four-year term as auditor in November after being appointed to the post in 2015. She defeated Republican Saundra McDowell last year to win a full four-year term.)

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